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Filed Pursuant to Rule 424(b)(4)
File No. 333-42744
PROSPECTUS
1,178,568
SHARES OF COMMON STOCK
THE A CONSULTING TEAM, INC.
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The selling security holders identified in this prospectus are offering
up to 1,178,568 of our shares of common stock. Our common stock is traded on the
Nasdaq National Market under the symbol "TACX." The last reported sale price for
our common stock on the Nasdaq National Market on October 9, 2000 was $5.75 per
share.
We will not receive any proceeds from the sale of shares of common
stock by the selling security holders. We are not offering any shares of common
stock for sale under this prospectus. See "Selling Security Holders" beginning
on page 14 for a list of the selling security holders. See "Plan of
Distribution" beginning on page 16 for a description of how the shares of common
stock can be sold.
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Investing in our common stock includes risks. For more information,
please see "Risk Factors" beginning on page 7.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is October 11, 2000
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TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION..........................................................2
INCORPORATED DOCUMENTS.........................................................3
THE COMPANY....................................................................4
RECENT DEVELOPMENTS............................................................6
RISK FACTORS...................................................................7
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................13
USE OF PROCEEDS...............................................................13
SELLING SECURITY HOLDERS......................................................14
PLAN OF DISTRIBUTION..........................................................16
LEGAL MATTERS.................................................................17
EXPERTS.......................................................................17
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES................18
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The shares of common stock are
not being offered in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate
after the date of such document.
AVAILABLE INFORMATION
We are subject to the information reporting requirements of the
Securities and Exchange Act of 1934. In accordance with these reporting
requirements, we will file reports and other information with the Securities and
Exchange Commission. Such reports and other information can be inspected and
copied at the Public Reference Room of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at 500 West
Madison Street, Suite 1400, Chicago, IL 60661-2511 and 7 World Trade Center,
13th Floor, New York, NY 10048, at prescribed rates. The Commission also
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants, such as ourselves, that file
electronically with the Commission. The address of such web site is
http://www.sec.gov. You may also obtain information from the Public Reference
Room by calling the Commission at 1-800-SEC-0330. In addition, our shares of
common stock are quoted on the Nasdaq National Market System, so our reports and
other information can be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
We intend to furnish our security holders with annual reports
containing additional financial statements and a report thereon by independent
certified public accountants prior to each of our annual meetings.
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INCORPORATED DOCUMENTS
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus. This means that we can disclose
important information to you by referring you to another document filed by us
with the Commission. Information incorporated by reference is deemed to be part
of this prospectus, except for any information superseded by this prospectus.
The following documents are incorporated herein by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1999 as filed with the Commission on March 29, 2000;
(b) Our Current Reports on Forms 8-K filed with the Commission on March
23, 2000, July 5, 2000, July 18, 2000 and October 11, 2000;
(c) Our Definitive Proxy Statement for the Annual Meeting of The A
Consulting Team, Inc. on Schedule 14A, dated April 25, 2000;
(d) Our Quarterly Report on Form 10-Q for the three-month period ended
March 31, 2000 as filed with the Commission on May 16, 2000, as
amended by our Amendment to our Quarterly Report on Form 10-Q/A
for the three-month period ended March 31, 2000 as filed with the
Commission on May 22, 2000;
(e) Our Quarterly Report on Form 10-Q for the three-month period ended
June 30, 2000 as filed with the Commission on August 14, 2000; and
(f) The description of our common stock contained in the registration
statement under the Exchange Act on Form 8-A as filed with the
Commission on August 7, 1997, and including any subsequent
amendment or report filed for the purpose of updating such
description.
In addition, all documents we have filed or subsequently file under
Sections 13(a), 13(c) 14 or 15(d) of the Exchange Act before the termination of
this offering are incorporated by reference.
We will provide without charge to any person (including any beneficial
owner) to whom this prospectus has been delivered, upon the oral or written
request of such person a copy of any document incorporated by reference in the
registration statement (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated by
reference into the information that the registration statement incorporates), of
which this prospectus forms a part. Such requests should be directed to Frank T.
Thoelen, The A Consulting Team, Inc., 200 Park Avenue South, New York, New York
10003. Our telephone number at that location is (212) 979-1010. Our corporate
web site address is http://www.tact.com. The information on our web site is not
intended to be a part of this prospectus.
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THE COMPANY
Introduction
Since 1983, we have provided IT services and solutions to Fortune 1000
and other large organizations. In 1997, we became a public company, and our
common stock is listed on the Nasdaq National Market under the symbol TACX.
Headquartered in New York City, our growth strategy includes opening Solution
BranchesSM in strategic locations throughout the United States. Currently, we
have Solution Branches in New York, NY, Clark, NJ, Stamford, CT, Chicago, and
Atlanta. Our presence in major metropolitan business centers allows the use of
regional resources, ensures face-to-face relationships and accountability with
clients, and keeps a finger on the pulse of local market needs. We believe that
proven performance and public presence gives clients the confidence to rely on
us as a trusted long-term business partner.
Products and Services
Consulting We are an end-to-end e-Services provider. We deliver
e-Services solutions from web strategy and design through web development and
integration to web application hosting. Our clients include a broad range of
Fortune 1000 companies and other large organizations.
Our primary focus is helping clients support their new business
imperatives by assisting these clients in the transition of their information
technologies from traditional mainframe and client/server environments to the
Internet and the Web. We offer to our clients the full scope of the web-enabling
process, and we provide partial or total solutions - from strategy and design,
to development, through conversions and integration, and ending with application
hosting and enterprise-scale deployment. We believe that our expertise leverages
clients' existing systems and data stores to significant business advantage: we
play an integral role in taking clients "from bricks and mortar to clicks and
mortar."
We also provide clients with enterprise-wide information technology
consulting, training services and software products. Our solutions cover the
entire spectrum of IT needs, including applications, data, and infrastructure.
We provide complete project life-cycle services--from application and system
design, through development and implementation, to documentation and training.
We believe that strategic alliances with leading software vendors ensure that
our solutions are dependable and within the mainstream of industry trends. These
partnerships allow us to provide a wide variety of business technology solutions
such as enterprise reporting applications, data warehousing, systems strategies,
data and database conversions, and application development services.
Software. We market and distribute a number of software products
developed by independent software developers. We believe our relationships with
over 150 software clients throughout the country provide opportunities for the
delivery of additional TACT consulting and training services. The software
products offered by us are developed in the United States, England and Finland
and marketed primarily through trade shows, direct mail, telemarketing, client
presentations and referrals. Our software personnel currently include sales and
marketing personnel as well as 24-hour technical support.
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Training. We offer an extensive selection of technical training courses
to large organizations at either our Training Center or at a client's site.
These courses include classes in client/server and legacy technologies as well
as in recent technologies, such as JAVA, ActiveX, Active Server Pages and HTML.
In addition, we conduct presentations on specific topics, such as co-existence
of legacy and client/server systems, use of legacy mainframe databases as
servers, conversion/migration of legacy systems to new architectures and
performance monitoring/tuning. We offer end-user training for both off-the-shelf
software, such as Microsoft Office and Lotus Notes, and customer specific
applications.
Growth Strategy
Our strategy is to:
o leverage our existing client base by cross-selling additional
information technology consulting services, software products and
training services to existing clients;
o expand our client base in geographic markets where we maintain
Solution Branch offices through targeted marketing initiatives,
participation in local and national trade shows, user group meetings
and conventions, referrals from existing clients and direct mail;
o increase name recognition and referral potential, reduce travel
expenses and attract locally-based, skilled consultants by opening
additional Solution Branch offices; and
o acquire companies and organizations that (i) are established in
geographic locations in which we are interested in expanding or (ii)
have service offerings that we find attractive.
Where you can obtain additional information:
Executive Office
200 Park Avenue South
New York, New York 10003
Telephone: (212) 979-1010
Website: http://www.tact.com
The information on our web site is not intended to be a part of this prospectus.
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RECENT DEVELOPMENTS
As of June 5, 2000, we entered into agreements with three investors to
issue an aggregate of 464,284 shares of our common stock and two-year warrants
to purchase an aggregate of an additional 464,284 shares of our common stock at
an initial exercise price of $13.00, subject to certain antidilution provisions,
for an aggregate purchase price of approximately $3,250,000. The shares of
common stock issued to such investors and the shares of common stock underlying
such warrants are being registered by us pursuant to the registration statement
of which this prospectus forms a part.
As of June 14, 2000, we entered into an agreement with two investors to
issue an aggregate of 125,000 shares of our common stock and two-year warrants
to purchase an aggregate of an additional 125,000 shares of our common stock at
an initial exercise price of $13.00, subject to certain antidilution provisions,
for an aggregate purchase price of approximately $1,000,000. The shares of
common stock issued to such investors and the shares of common stock underlying
such warrants are being registered by us pursuant to the registration statement
of which this prospectus forms a part.
As of September 29, 2000, we entered into an agreement with an investor
to issue 500,000 shares of our common stock and a two-year warrant to purchase
an aggregate of an additional 500,000 shares of our common stock at an initial
exercise price of $13.00, subject to certain antidilution provisions, for an
aggregate purchase price of $4,000,000. We have agreed to register the shares of
common stock issued to such investor and the shares of common stock underlying
such warrant under the Securities Act.
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RISK FACTORS
In this section, we highlight the significant risks associated with our
business and operations. Investing in our common stock involves a high degree of
risk. You should be able to bear a complete loss of your investment. To
understand the level of risk, you should carefully consider the following risk
factors, as well as the other information found in this prospectus, when
evaluating an investment in the shares.
We have incurred operating losses from time to time and expect to incur
net losses and negative cash flow for the foreseeable future. We incurred net
losses of $2,666,636 for the year ended December 31, 1999, due in part to
$2,600,000 in expenses attributable to the acquisition of our majority ownership
interest in T3 Media and an increase in the number of salaried personnel
supporting new Solution Branch offices, and a net loss of $3,246,000 for the six
months ended June 30, 2000 for similar reasons. We expect to incur significant
operating losses and continue to make capital expenditures and, as a result, we
will need to generate significant revenues to achieve and maintain
profitability. We cannot guarantee that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot guarantee that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.
Because our strategy includes acquisitions of other businesses and opening
additional Solution Branch offices, any cash used to make these acquisitions and
increased operating expenses will reduce our available cash.
We may be unable to meet our future capital requirements. We will not
receive any of the proceeds of the sale of the shares of common stock offered
hereby by the selling shareholders. We may require additional financing before
January 1, 2001 in order to continue to implement our product and services
development, marketing and other corporate programs. If so, we may not be able
to obtain such financing or obtain it on terms acceptable to us. Without
additional financing, we may be forced to delay, scale back or eliminate some or
all of our product and services development, marketing and other corporate
programs. If we are able to obtain such financing, the terms may contain
restrictive covenants that might negatively affect our shares of common stock,
such as limitations on payments of dividends or, in the case of a debt
financing, reduced earnings due to interest expenses. Any further issuance of
equity securities would likely have a dilutive effect on the holders of our
shares of common stock. Our business, operating results and financial condition
may be materially harmed if revenues do not develop or grow slower than we
anticipate, if operating expenses exceed our expectations or cannot be reduced
accordingly, or if we cannot obtain additional financing.
Client Revenue and Geographic Concentrations. We derive a significant
portion of our revenues from a relatively limited number of clients primarily
located in the New York/New Jersey metropolitan area of the United States.
Adverse economic conditions affecting this region could have an adverse effect
on the financial condition of our clients located there, which in turn could
adversely impact our business and future growth. Revenues from our ten most
significant clients accounted for a majority of our revenues during the year
ended December 31, 1999. In each of the last three years, we have had at least
one customer who represented at least 10% of our revenues for that year. During
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the year ended December 31, 1997, our largest customer represented 24% of our
revenues. During the year ended December 31, 1998, our three largest customers
represented 16%, 15% and 12% of our revenues. During the year ended December 31,
1999, our two largest customers represented 23% and 14% of revenues. During the
six months ended June 30, 2000, one of our customers represented 14% of
revenues. Besides these customers, no other customer represented greater than
10% of our revenues. In any given year, our ten most significant customers may
vary based upon specific projects for those clients during that year. There can
be no assurance that our significant clients will continue to engage us for
additional projects or do so at the same revenue levels. Clients engage us on an
assignment-by- assignment basis, and a client can generally terminate an
assignment at any time without penalty. The loss of any significant customer
could have a material adverse effect on our business, results of operations and
financial condition. Our failure to develop relationships with new customers
could have a material adverse effect on our business, results of operations and
financial condition.
Our projects entail significant risks. Many of our engagements involve
projects that are critical to the operations of our clients' businesses and
provide benefits that may be difficult to quantify. Our failure or inability to
meet a client's expectations in the performance of our services could result in
a material adverse change to the client's operations and therefore could give
rise to claims against us or damage our reputation, adversely affecting our
business, results of operations and financial condition.
Our business is subject to rapid technological change and is dependent
on new solutions. Our success will depend in part on our ability to develop
information technology solutions to meet client expectations, including
e-commerce solutions, and offer software solutions that keep pace with
continuing changes in information technology, evolving industry standards,
changing client preferences and a continuing shift to outsourced solutions by
clients. We cannot assure you that we will be successful in adequately
addressing the outsourcing market or other information technology developments
on a timely basis or that, if addressed, we will be successful in the
marketplace. We also cannot assure you that products or technologies developed
by others will not render our services uncompetitive or obsolete. Our failure to
address these developments could have a material adverse effect on our business,
results of operations and financial condition.
We face difficulties typically encountered by development state
companies in new and rapidly evolving markets because of our new e-commerce
initiative. We recently began to provide e-commerce Web design and Web business
planning, strategic planning and marketing strategy consulting services through
our majority-owned subsidiary, T3 Media, Inc. We also provide remote application
hosting and off-site documentation storage to Web-based companies through a
strategic relationship with Always-On, Inc. (formerly LightPC.com, Inc.)
Revenues from our e-commerce services constituted 21% of our revenues for the
year ended December 31, 1999 and 46% for the six months ended June 30, 2000. An
investor purchasing our shares of common stock must therefore consider the risks
and difficulties frequently encountered by early stage companies in new and
rapidly evolving markets, such as e-commerce. These risks involve our and our
subsidiary's and strategic partners' abilities to:
o create a customer base;
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o respond to changes in a rapidly evolving and unpredictable business
environment;
o maintain current and develop new strategic relationships;
o manage growth;
o continue to develop and upgrade technology; and
o attract, retain and motivate qualified personnel.
We cannot assure you that any products or services developed by us, our
subsidiary or our strategic partners will achieve market acceptance.
Our ability to maintain billing margins is uncertain. We derive
revenues primarily from the hourly billing of our consultants' services and, to
a lesser extent, from fixed-price projects. Our most significant cost is project
personnel cost, which consists of consultant salaries and benefits. Thus, our
financial performance is primarily based upon billing margin (billable hourly
rate less the consultant's hourly cost) and personnel utilization rates (number
of days worked by a consultant during a two-week billing cycle divided by the
number of billing days in that cycle). To date, we have been able to maintain
our billing margins by offsetting increases in employee salaries with increases
in our hourly rates. There can be no assurance, however, that our revenues will
continue to be billed primarily on a time and materials basis or that we will be
able to continue to pass along increases in our cost of services to our clients.
We may have difficulty managing our growth. Our expansion is dependent
upon, among other things,
o our ability to hire and retain consultants as employees or
independent consultants,
o our ability to identify suitable new geographic markets with
sufficient demand for our services, hire and retain skilled
management, marketing, customer service and other personnel, and
successfully manage growth, including monitoring operations,
controlling costs and maintaining effective quality and service
controls, and
o if we consummate additional acquisitions, our ability to successfully
and profitably integrate any acquired businesses into our operations.
If our management is unable to manage growth or new employees or
consultants are unable to achieve anticipated performance levels, our business,
results of operations and financial condition could be materially adversely
affected.
We rely on key executives. Our success is highly dependent upon the
efforts and abilities of our executive officers, particularly Shmuel BenTov, our
Chief Executive Officer and President. In addition, we are dependent upon the
services of Frank T. Thoelen, our Chief Financial Officer. Mr. BenTov has
entered into an employment agreement, which terminates on December 31, 2001, and
Mr. Thoelen has entered into an employment agreement, which was automatically
renewed for a one-year period on July 1, 2000. Although these employment
agreements contain noncompetition, nondisclosure and nonsolicitation covenants,
these contracts do not guarantee that Mr. BenTov or Mr. Thoelen will continue
their employment with us. The loss of the services of either of these key
executives for any reason could have a material adverse effect upon our
business, results of operations and financial condition.
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Our quarterly results of operations are variable. Variations in our
revenues and results of operations occur from time to time as a result of a
number of factors, such as the timing of new Solution Branch openings, the size
and significance of client engagements commenced and completed during a quarter,
the number of business days in a quarter, consultant hiring and utilization
rates and the timing of corporate expenditures. The timing of revenues is
difficult to forecast because our sales cycle can be relatively long and may
depend on such factors as the size and scope of assignments and general economic
conditions. A variation in the number of client assignments or the timing of the
initiation or the completion of client assignments, particularly at or near the
end of any quarter, can cause significant variations in results of operations
from quarter to quarter and can result in losses to us. In addition, our
engagements generally are terminable by the client at any time without penalty.
Although the number of consultants can be adjusted to correspond to the number
of active projects, we must maintain a sufficient number of senior consultants
to oversee existing client projects and to assist with our sales force in
securing new client assignments. An unexpected reduction in the number of
assignments could result in excess capacity of consultants and increased
selling, general and administrative expenses as a percentage of revenues. We
have also experienced, and may in the future experience, significant
fluctuations in the quarterly results of our software sales as a result of the
variable size and timing of individual license transactions, competitive
conditions in the industry, changes in customer budgets, and the timing of the
introduction of new products or product enhancements. In the event that our
results of operations for any period are below the expectation of market
analysts and investors, the market price of our shares of common stock could be
adversely affected.
Our President and Chief Executive Officer currently owns a controlling
amount of our outstanding shares of common stock; his interests may conflict
with yours. As of September 30, 2000, Shmuel BenTov, our President and Chief
Executive Officer, beneficially owns 48.31% of our outstanding shares of common
stock. Mr. BenTov would most likely be able to control the outcome of any matter
requiring shareholder approval.
We have anti-takeover provisions that could prevent an acquisition of
our business at a premium price. Some of the provisions of our certificate of
incorporation could discourage, delay or prevent an acquisition of our company
at a premium price or at all. For example, these provisions authorize the
issuance of preferred stock in one or more series. Moreover, Section 912 of the
New York Business Corporation Law prohibits a domestic corporation from engaging
in a business combination with an interested shareholder (defined as the
beneficial owner of 20% or more of the stock of the corporation) for a period of
five years from the time the shareholder acquired the stock unless certain
conditions are met. These provisions are intended to encourage any person
interested in acquiring our company to negotiate with and obtain the approval of
our board of directors in connection with the transaction.
Our common stock price may fluctuate, which may make it difficult to
resell your shares of common stock at attractive prices. The market price of our
common stock may be highly volatile. The market prices of securities of other
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technology-based companies currently are highly volatile. Factors that could
cause volatility in our ordinary share price include:
o fluctuations in our quarterly operating results;
o deviations in our results of operations from the estimates of
securities analysts;
o changes in the market valuations of other technology companies and
stock market price and volume fluctuations generally;
o economic conditions specific to the information technology and
e-commerce industries;
o announcements by us or our competitors relating to new services or
technologies, significant acquisitions, strategic relationships,
joint ventures or capital commitments;
o regulatory developments; and
o additions or departures of our key personnel.
Sales of shares eligible for future sale could impair our stock price.
As of September 30, 2000, there were 7,109,996 of our shares of common stock
outstanding, of which 1,624,996 were restricted securities as that term is
defined by Rule 144 under the Securities Act of 1933, including (i) the 589,284
outstanding shares of common stock registered in this offering, (ii) 535,712
outstanding shares of common stock registered under the Securities Act pursuant
to a registration statement on Form S-3 and (iii) 500,000 outstanding shares of
common stock which we have agreed to register under the Securities Act. Such
outstanding restricted shares will be eligible for public sale only if a current
registration statement under the Securities Act is in effect with respect to
such shares or such shares are sold in accordance with Rule 144. The market
price of our common stock could drop due to the sale of a large number of our
shares of common stock, such as the shares of common stock sold under this
prospectus or under Rule 144, or the perception that these sales could occur.
These factors could also make it more difficult for us to raise funds through
future offerings of shares of common stock.
Competition. The market for information technology services includes a
large number of competitors, is subject to rapid change and is highly
competitive. Our primary competitors include participants from a variety of
market segments, including consulting divisions of the "Big Five" accounting
firms, interactive advertising agencies, web development companies, systems
consulting and implementation firms, application software firms and management
consulting firms. Many of these competitors have significantly greater
financial, technical and marketing resources and greater name recognition than
we do. In addition, we compete with our clients' internal resources,
particularly when these resources represent a fixed cost to the client. In the
future, such competition may impose additional pricing pressures on us. We
cannot assure you that we will compete successfully with our existing
competitors or with any new competitors.
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Intellectual Property Rights. Our business includes the development of
custom software applications in connection with specific client engagements.
Ownership of such software is generally assigned to the client. We rely upon a
combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect its proprietary rights and the
proprietary rights of third parties from whom we license intellectual property.
We enter into confidentiality agreements with our employees and limit
distribution of proprietary information. However, we cannot assure you that the
steps taken by us in this regard will be adequate to deter misappropriation of
proprietary information or that we will be able to detect unauthorized use and
take appropriate steps to enforce our intellectual property rights. We are
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require us to spend
significant sums in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses to the intellectual property which is the subject
of the asserted infringement. In addition, we are aware of other users of the
term "TACT" and combinations including "A Consulting," which users may be able
to restrict our ability to establish or protect our right to use these terms. We
have in the past been contacted by other users of the term "TACT" alleging
rights to the term. We have completed filings with the U.S. Patent and Trademark
Office in order to protect certain marks, including "TACT" and "The A Consulting
Team." Our inability or failure to establish rights to these terms or protect
our rights may have a material adverse effect on our business, results of
operations and financial condition.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, and the other reports we have filed from time to time
with the Securities and Exchange Commission, contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Forward-looking statements deal with our current plans,
intentions, beliefs, expectations and statements of future economic performance.
Statements containing terms like "believes," "does not believe," "plans,"
"expects," "intends," "estimates," "anticipates," and other phrases of similar
meaning are considered to imply uncertainty and are forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements
throughout this prospectus, including under "Risk Factors." You should read
these cautionary statements as being applicable to all related forward-looking
statements wherever they appear in this prospectus, the materials referred to in
this prospectus, the materials incorporated by reference into this prospectus
and our press releases.
We cannot guarantee our future results, levels of activity, performance
or achievements. Neither we nor any other person assumes responsibility for the
accuracy and completeness of these statements.
We are under no duty to update any of the forward-looking statements
after the date of this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
common stock by the selling security holders.
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SELLING SECURITY HOLDERS
Our shares of common stock to which this prospectus relates are being
registered for resales by the selling security holders.
The selling security holders may resell all, a portion or none of such
shares of common stock from time to time. The table below sets forth with
respect to each selling security holder, based upon information available to us
as of September 30, 2000, the number of shares of common stock beneficially
owned, the number of shares of common stock registered by this prospectus and
the number and percent of outstanding shares of common stock that will be owned
after the sale of the registered shares of common stock assuming the sale of all
of the registered shares of common stock.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering (1) the Offering(1) (2)
----------------------- ------------------------
Shares Percent Shares Offered Shares Percent
-------- --------- ---------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Eurocom Communications Ltd. 357,140 (3) 4.90% 357,140 (3) 0 0
Poalim Capital Markets Technologies 285,714 (4) 3.94 285,714 (4) 0 0
Koonras Technologies Ltd. 285,714 (4) 3.94 285,714 (4) 0 0
Michael G. Jesselson 12/18/80 Trust 175,000 (5) 2.43 175,000 (5) 0 0
Michael G. Jesselson 4/8/71 Trust 75,000 (6) 1.05 75,000 (6) 0 0
</TABLE>
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(1) As used in this table, "beneficial ownership" means the sole or shared
voting and investment power of shares of common stock. Unless otherwise
indicated, each selling security holder listed below has sole voting
and investment power with respect to the shares of common stock
indicated as beneficially owned thereby. A person is deemed to have
"beneficial ownership" of any shares of common stock that such person
has a right to acquire within sixty days of the date of this
prospectus. In accordance with Rule 13d-3 of the Exchange Act, any
shares of common stock that any selling security holder has the right
to acquire within sixty days of the date of this prospectus are deemed
to be outstanding for the purpose of computing the beneficial ownership
percentage of such selling security holder, but have not been deemed
outstanding for the purpose of computing the percentage for any other
selling security holder.
(2) With respect to the selling security holders, it has been assumed that
all shares of common stock so offered will be sold.
(3) Includes 178,570 shares of common stock underlying warrants.
(4) Includes 142,857 shares of common stock underlying warrants.
(5) Includes 87,500 shares of common stock underlying warrants.
(6) Includes 37,500 shares of common stock underlying warrants.
The information provided in the table above with respect to the selling
security holders has been obtained from such selling security holders.
Except as otherwise disclosed above or in documents incorporated herein
by reference, the selling security holders have not within the past three years
had any position, office or other material relationship with our company.
Because the selling security holders may sell all or some portion of the shares
of common stock beneficially owned by them, only an estimate (assuming the
selling security holders sells all of the shares offered hereby) can be given as
to the number of shares of common stock that will be beneficially owned by the
selling security holders after this offering. In addition, the selling security
holders may have sold, transferred or otherwise disposed of, or may sell,
transfer or otherwise dispose of, at any time or from time to time since the
dates on which they provided the information regarding the shares of common
stock beneficially owned by them, all or a portion of the shares of common stock
beneficially owned by them in transactions exempt from the registration
requirements of the Securities Act.
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PLAN OF DISTRIBUTION
This prospectus covers the sale of shares of common stock by the
selling security holders. As used herein, "selling security holders" include
donees, pledgees, transferees or other successors in interest selling shares of
common stock received from a selling security holder after the date of this
prospectus as a gift, pledge, partnership distribution or other non-sale related
transfer. Any distribution of any such securities by the selling security
holders in interest may be effected from time to time in one or more of the
following transactions:
o to underwriters who will acquire securities for their own account and
resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may
change from time to time);
o through brokers, acting as principal or agent, in transactions (which
may involve block transactions) on the Nasdaq National Market or on
such other market or exchange on which the securities are then
listed, in special offerings, exchange distributions pursuant to the
rules of the applicable exchanges or in the over-the-counter market
or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices
or at fixed prices;
o directly or through brokers or agents in private sales at negotiated
prices;
o through put or call options transactions relating to the shares of
common stock or through short sales of shares of common stock at
market prices prevailing at the time of sale or at negotiated prices;
or
o by any other legally available means.
We will not receive any proceeds from the sale of the shares of common
stock. The aggregate proceeds to the selling security holders from the
securities offered hereby will be the offering price less applicable commissions
or discounts, if any. We do not know if the selling security holders will sell
any of the securities offered hereby or transfer, devise or gift securities by
other means not described in this prospectus.
The selling security holders and such underwriters, brokers, dealers or
agents, upon effecting a sale of securities, may be considered "underwriters" as
that term is defined in the Securities Act. The selling security holders will be
subject to the prospectus delivery requirements because the selling security
holders may be deemed to be "underwriters" within meaning of Section 2(a)(11) of
the Securities Act. Sales effected through agents, brokers or dealers will
ordinarily involve payment of customary brokerage commissions although some
brokers or dealers may purchase such securities as agents for others or as
principals for their own account. The selling security holders will pay any
sales commissions or similar selling expenses applicable to the sale of shares
of common stock. A portion of any proceeds of sales and discounts, commissions
or other sellers' compensation may be deemed to be underwriting compensation for
purposes of the Securities Act.
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Selling security holders also may resell all or a portion of the shares
of common stock in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of such rule.
Pursuant to applicable rules and regulations under the Exchange Act,
any person engaged in the distribution of the securities offered hereby may not
simultaneously engage in market activities for the shares of common stock for a
period of five business days prior to the commencement of such distribution. In
addition, each selling security holder and any other person who participates in
a distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which provisions may limit the timing of purchases and may affect the
marketability of the securities and the ability of any person to engage in
market activities for the shares of common stock.
At the time a particular offering of securities is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriters for
securities purchased from the selling security holders, any discounts,
commissions and other items constituting compensation from the selling security
holders and any discounts, commissions or concessions allowed or reallowed or
paid to dealers. In addition, we will file a supplement to this prospectus upon
a selling security holder notifying us that a donee, pledgee, transferee or
other successor-in-interest intends to sell more than 500 shares.
In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the securities may not be sold unless the securities have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and the conditions of such exemption have been
satisfied.
We have agreed that we will bear all costs, expenses and fees in
connection with the registration or qualification of the shares of common stock
under federal and state securities laws. We and each selling security holder
have agreed to indemnify each other and certain other persons against certain
liabilities in connection with the offering of the securities, including
liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for The A Consulting Team by Orrick, Herrington & Sutcliffe LLP.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by one of our directors, officers or
controlling persons in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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1,178,568
SHARES OF COMMON STOCK
THE A CONSULTING TEAM, INC.
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PROSPECTUS
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October 11, 2000
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